How to Set Take Profit and Stop Loss in Crypto
Setting TP and SL levels before entering a trade is the difference between a plan and a gamble. This guide explains exactly how to calculate these levels and why the risk/reward ratio matters more than your win rate.
What is position sizing?
Position sizing is the process of determining how many units of an asset to buy or sell on a given trade. Most beginners skip this step entirely — they deposit $1,000 and just buy "a bit" of Bitcoin. This is one of the fastest ways to blow up an account.
Professional traders do the opposite: they start with risk — how much am I willing to lose if this trade goes wrong? — and work backwards to find the correct position size.
Formula
Position Size = (Balance × Risk%) ÷ (Entry − Stop Loss)
Quantity = Position Size ÷ Entry Price
Risk% is typically 1–2% of your total account balance per trade.
Step-by-step example
Example — BTC Long Trade
Account balance$10,000
Risk per trade1% = $100
Entry price$65,000
Stop loss price$63,700
SL distance$1,300 (2%)
Position size$5,000
Quantity (BTC)0.0769 BTC
Max loss if SL hits−$100
Even though the position size is $5,000 — half of the entire account — the actual risk is only $100. This is because the stop loss is only 2% away from the entry.
The 1–2% rule explained
If you risk 2% per trade, you need to lose 50 trades in a row to lose your entire account. No edge-based strategy loses 50 times in a row. This rule keeps you in the game long enough for your edge to play out.
Pro tip: Most professional crypto traders use 0.5–1% risk per trade. This feels painfully small at first, but it allows you to trade for years without blowing up.
Warning: Risking more than 3% per trade is considered aggressive. At 5% risk, just 20 consecutive losing trades wipe your account.
Common mistakes
- Using fixed lot sizes — buying "0.1 BTC every time" ignores that your stop loss distance changes with every trade.
- Ignoring the stop loss — position size without a defined stop loss is just gambling.
- Risking more after losses — the urge to "make it back quickly" leads to account blow-ups.
- Not accounting for fees — 0.1% each way on Bybit adds up. Factor this into your break-even.
- Overleveraging — using 10x leverage with a 2% stop loss means your real risk is 20%.
Frequently asked questions
What is a good position size for crypto? +
For most retail traders, risking 1–2% per trade is considered sustainable. If you are new, start with 0.5–1%. The goal is to stay in the game long enough to develop your edge.
How do I calculate position size without a stop loss? +
You cannot calculate position size without a stop loss in a risk-controlled way. Without knowing where you are wrong, you cannot know how much to risk. A simple alternative: never put more than 5–10% of your portfolio into a single asset.
Does position size change with leverage? +
The formula gives you the nominal position size. With 5x leverage, you only need to post 20% as margin. However, your real risk stays the same regardless of leverage.
Should I use the same position size for all trades? +
Most traders use a fixed risk percentage (e.g. always 1%), but the actual position size varies with every trade depending on the stop loss distance. Our calculator handles this automatically.